Friedman Billings upgraded R&G Financial (RGF

) to market perform from underperform.

Analyst Paul Miller says the upgrade is due to valuation. He notes the stock has dropped 36% since he downgraded RFG following the Apr. 25 announcement that it would restate past earnings reports because it incorrectly valued a portfolio of securities. He believes the market's reaction is overdone. He says he will revisit his rating once he receives clarity on its restatement.

Miller has a $18 price target, which represents 10.3 times his $1.75 2006 EPS estimate. For 2005, he sees $1.50 EPS.